Banks active as Citi, Goldman, Bank of America, UBS price; Goldman, Morgan Stanley better

By Andrea Heisinger and Cristal Cody

New York, Jan. 19 - Banks came roaring back to the investment-grade bond market on Thursday following fourth-quarter earnings announcements.

Bank of America Corp. sold $1.5 billion of 10-year debt after giving its Q4 numbers earlier in the day. The bank reported earnings of $2 billion, or 15 cents per share for the quarter, compared to a loss of $1.2 billion in the same quarter of 2010.

The bank was joined by Citigroup Inc. and Goldman Sachs Group Inc., both of which announced their quarterly earnings on Wednesday.

Citigroup priced $1 billion of 30-year bonds - the first time the financial has priced that maturity since 2009. The debt priced tighter than talk, and at a much lower spread than Citi's previous long bond.

Goldman Sachs at first announced a sale of 10-year paper but later added a reopening of some notes due 2015 to the deal that totaled $4.5 billion.

UBS AG came to the market for $1.5 billion of three-year covered bonds. It was the first issue of that kind of debt from a European bank in recent months since the euro zone debt crisis began.

There was one corporate deal from Amphenol Corp. The Connecticut-based issuer upsized the sale to $500 million of 10-year debt from $350 million.

Germany's KfW sold $3 billion of 10-year notes in line with price guidance.

Positive earnings from banks in the last two days boosted the tone, and many of those that had just reported Q4 numbers and come out of blackout decided to take advantage of the tone.

"It felt good this morning," one syndicate source said. "Futures were up and earnings have been good."

Citigroup and Goldman Sachs announced their deals right off the bat after the open and were joined by UBS and Bank of America later.

"Everybody announced and then some others decided to go for it," a market source said. "Right now, if you're a financial, you're going to issue before more news comes out [of Europe]."

New paper firms

Overall trading volume jumped about 20% to more than $16 billion over the day.

Goldman Sachs' new issue traded about 15 bps better in early trading after the notes priced.

Citigroup's long bonds also firmed in the gray market after pricing.

No immediate trading levels were seen on the new paper from Bank of America and UBS.

"Everything's been pretty strong today," a trader said. "Financials are 5 [bps] to 10 [bps] better with Morgan Stanley being the outperformer."

Investment-grade bank and brokerage credit default swaps costs were down on Thursday. A trader said bank paper CDS costs were 5 bps to 20 bps lower, while brokerage company paper CDS costs traded 25 bps to 27 bps lower.

Amphenol's notes also were seen 5 bps tighter.

The Markit CDX Series 17 North American investment-grade index firmed 2 bps to a spread of 108 bps on Thursday.

Treasuries sank as stocks rallied. The 10-year Treasury note yield climbed 9 bps 1.98%. The yield on the 30-year bond rose to 3.04% from 2.95%.

Citi prices long bond

Citigroup priced $1 billion of 5.875% 30-year senior bonds (A3/A-/A) at a spread of Treasuries plus 297 bps, a source close to the trade said.

The debt was sold tighter than guidance, which was in the 305 bps area, the source said. There was more than $7.3 billion on the books for the trade.

Citigroup Global Markets Inc. was the bookrunner.

Citi last sold 30-year debt in a $2.5 billion deal of 8.125% bonds priced at 380 bps over Treasuries on July 20, 2009. The bank last accessed the debt market with a $2.5 billion deal of 4.45% five-year paper priced at 360 bps over Treasuries on Jan. 3.

Citigroup's bonds traded tighter in the gray market at 288 bps bid, 285 bps offered, a trader said.

The financial services company is based in New York City.

Goldman's $4.5 billion deal

Goldman Sachs Group priced $4.5 billion of notes (A1/A-/A) in two parts after a reopening of debt due 2015 was added to the sale, a market source said.

There was $4.25 billion of 5.75% 10-year notes priced at a spread of Treasuries plus 380 bps. The tranche priced at the tight end of talk, which was in the 385 bps area.

A second tranche was a reopening of 5.125% notes due 2015 to add $250 million. The notes were priced at Treasuries plus 350 bps.

This issuance will be added to the original amount sold in 2005.

Goldman Sachs & Co. was the bookrunner.

Goldman's last issuance of 10-year debt was a $1 billion reopening of 5.25% notes due 2021 priced on Oct. 25, 2011 at 295 bps over Treasuries. Its last debt sale was $600 million of floating-rate notes due 2016 priced on Nov. 9, 2011.

Goldman's new notes firmed 15 bps in early trading after the deal priced.

The issue is "trading around 365 [bps] now," a trader said.

The financial services company is based in New York City.

UBS prices covered bonds

UBS sold $1.5 billion of 1.875% three-year covered bonds (Aaa/AAA) at a spread of 135 bps over mid-swaps, a market source said.

Bookrunners were Barclays Capital Inc., HSBC Securities (USA) Inc., RBS Securities Inc., Scotia Capital (USA) Inc. and UBS Securities LLC.

The financial services company is based in Basel and Zurich, Switzerland.

BofA prices $1.5 billion

Bank of America sold $1.5 billion of 10-year debt after announcing fourth-quarter earnings, an informed source said.

The notes (Baa1/A/A-) were sold at a spread of Treasuries plus 378 bps.

Bookrunner was Bank of America Merrill Lynch.

The financial services company is based in Charlotte, N.C.

Amphenol upsizes 10-year

Amphenol priced an upsized $500 million of 4% 10-year senior notes (Baa2/BBB) to yield Treasuries plus 200 bps, a market source said.

The deal size was increased from $350 million, the source said.

Barclays Capital, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC ran the books.

Proceeds will be used to repay amounts under a revolving credit facility.

The notes traded 5 bps better at 200 bps bid, 205 bps offered in the secondary market, a trader said.

The designer, manufacturer and marketer of electric, electronic and fiber optic components is based in Wallingford, Conn.

KfW's 10-year prices

KfW priced $3 billion of 2.625% 10-year global notes (Aaa/AAA/AAA) at mid-swaps plus 55 bps, according to an FWP filing with the Securities and Exchange Commission and a market source.

The debt sold in line with guidance in the mid-swaps plus 55 bps area.

Bookrunners were Citigroup, Deutsche Bank Securities Inc. and Goldman Sachs.

The German-government owned development bank is based in Frankfurt.

Toyota gives floater terms

Toyota Motor Credit Corp. priced $181.5 million of floating-rate notes due 2013 (Aa3/AA-) at par to yield Libor plus 25 bps, according to FWP filings with the SEC.

Agents were Mizuho Securities USA Inc., RBC Capital Markets LLC and Toyota Financial Services Securities USA Corp.

The U.S. funding arm of Toyota is based in Torrance, Calif.

Morgan Stanley better

Late afternoon in the secondary market, Morgan Stanley's 5.5% senior notes due 2021 firmed 15 bps in trading to 405 bps bid, 395 bps offered, a trader said Thursday.

The notes priced on Oct. 27 in a $1 billion offering at a spread of 335 bps over Treasuries.

The investment bank is based in New York.

Paul Deckelman contributed to this review

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